Chapter 3: A Comparative Analysis of eBay and Amazon

Sandeep Krishnamurthy
University of Washington, USA

Copyright 2004, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

Abstract

Even though Amazon.com has received most of the initial hype and publicity surrounding e-commerce, eBay has quietly built an innovative business truly suited to the Internet. Initially, Amazon sought to merely replicate a catalog business model online. Its technology may have been innovative-but its business model was not. On the other hand, eBay recognized the unique nature of the Internet and enabled both buying and selling online with spectacular results. Its auction format was a winner. eBay also clearly demonstrated that profits do not have to come in the way of growth—an argument that Bezos never tired of making. Amazon was initially focused on BN.com as a competitor. Over time, Amazon came to recognize eBay as the competitor. Its initial foray into auctions was a spectacular failure. Now, Amazon is trying to compete with eBay by facilitating selling and strengthening its affiliates program.